Indian airlines are in a no-win situation.
From one side they face excessive taxation which distorts input prices like aviation fuel to twice its international price, from the other, airports hiking up charges.
After years of bleeding, the airlines have, for the last six months, been hiking airfares to redress the situation. However, many of the hikes are simply too high. For example, a two day advance notice one-way airfare from Mumbai to Ahmedabad ranges from around Rs. 11,000 to over Rs. 16,000.
The rule of thumb is that the aviation industry grows at twice the rate of a country’s economic growth. Even with a low 5.5%, airlines should have seen a growth of 10%. Instead thanks to these fare hikes, air passenger number are dropping, down over 15% from a year ago.
The passengers are travelling, but they have migrated, en-mass, back to surface transport; trains and buses, especially on regional sectors of 300km~750km. Business travellers who often travel on short notice, especially regionally, are simply unable to afford these sky high fares.
The natural solution that comes to mind is, reduce the fares!!!! That is easier said than done. Any move will trigger a fare ware between the airlines, who simply cannot afford to bleed more money.
Caught between the devil and the deep blue sea, in a bid to counter this mass migration, Jet Airways is introducing the concept of the pre-paid coupon book called the “ONE FARE PASS”. The new booklets, valid for six months from the date of purchase, contain four coupons, each of which are applicable for one sector travel on domestic flights that are less than 750kms in distance, on either Jet Airways or JetKonnect flights. Connecting flights will require two coupons.
The price of a booklet for travel in Premiere class is Rs. 49,216 inclusive of all taxes (Rs. 12,304 per coupon). A four coupon economy class booklet is Rs. 19,606 (Rs. 4901.50/coupon) for Jet Airways, and Rs. 17,254 (Rs. 4313.50/coupon) for JetKonnect. The company release did not clarify whether a Jet Airways coupon could be used for a JetKonnect flight.
The booklets may be purchased by individuals and organisations and the blank coupons can be transferred to any person till details are endorsed on the coupon. Once endorsed coupons will be non-transferable. The booklets are on sale till March 31, 2013.
Readers may recall this booklet concept was first introduced, many years ago, by the erstwhile Indian Airlines which is now the domestic arm of Air India, except at that time, the booklet was valid for any domestic sector regardless of distance. Jet Airways is capping the distance to 750km as this is the distance maximum impacted by the flight of passengers to surface transport of trains and buses.
This scheme is targeted to individuals who travel short distances, often at short notice. Last minute fares are frightfully expensive (Bombay Ahmedabad on a two day notice is between Rs. 12,000~Rs. 16,000, Bangalore Hyderabad or Chennai is Rs. 5,500~7,500, etc.), and individuals and organisations will get the benefit of a predictable fare. Organisations will further benefit as the booklet is not tied to any one person till a booking is made and the coupon is endorsed in the traveller’s name.
The typical sectors that Jet as aiming at are Mumbai Ahmedabad, Baroda, Aurangabad, or Indore, Bangalore Hyderabad, Mangalore, Chennai, Trivandrum, Chennai Hyderabad or Trivandrum, Delhi Jaipur, Chandigarh or Amritsar, and Kolkata Bhubaneshwar, Dibrugarh, Patna or Guwahati.
One business which can benefit from this scheme can be travel agents. I am sure some of the travel agent readers of Bangalore Aviation can consider this booklet scheme as a long term investment and offer a last minute passenger a 50% discount on a Rs. 16,000 airfare, and still make almost 100% profit on investment. A commission of 10% of the profit may please be donated to Bangalore Aviation for the idea.
On further investigation, we find that Jet Airways is also offering a similar four coupon six month One Fare Pass in Premiere class for international travel with the Gulf, SAARC, and South East Asia for about Rs. 1.09 lakhs. The terms and conditions are here.